Commodity Conversations Weekly Press Summary

Countries around the world are unlikely to impose more restrictions on food exports, according to the FAO which said that “food supply is not the issue” amid the coronavirus pandemic. The export control measures imposed by countries like Russia, Kazakhstan, Ukraine and Vietnam have been removed as the supply chain showed it could easily cope with the increase in demand from countries building food stocks. However, an economist warned that an uncontrolled spread of the disease in Brazil could be dramatic as the country is “basically […] feeding China”. 

Moreover, ships looking to export grains from Argentina and Paraguay are struggling because of the very low water level in the Parana river, which is pushing traders to buy from Brazil instead. Besides, the US reaction to China’s new security policy in Hong Kong, along with the US President blaming China for the coronavirus pandemic, could potentially lead to the collapse of the Phase One trade deal. China’s state-run agricultural groups have been reportedly instructed to stop buying US farm goods. US lawmakers, however, remained confident that the tensions were only temporary and that China would honour the deal. Some pointed to the Chinese purchase of US soybeans earlier this week, although market sources said this could just be motivated by the low price

The United Arab Emirates, which currently relies on imports for 90% of its food supply, is intensifying efforts to produce more food locally. The country successfully harvested rice grown using underwater irrigation and desalinated sea water, a method considered more sustainable than Saudi Arabia’s use of groundwater and rotary sprinklers. In parallel, Abu Dhabi Ports Co launched a new shipping company, called Safeen Feeders, which will strengthen food and medical imports from India, Pakistan, the Persian Gulf and East Africa. 

In contrast, Thailand is cementing its position as a major food exporter. A government official said she expected that the proportion of food and agricultural exports will keep growing – the weak economy and currency should keep supporting exports. Nonetheless, farmers are worried about a new ban on paraquat and chlorpyrifos which was enforced as of June 1. Farmers often do not have alternatives and total food output could suffer as a result. A similar decision to ban glyphosate was reversed in November after some pressure from the US. 

Glyphosate was in the news this week as lawyers presented arguments in the appeal of a California verdict against Bayer, the maker of the Roundup pesticide. Bayer’s legal strategy reportedly revolved around fighting the three guilty verdicts to gain leverage and settle cases. The Californian court heard arguments that federal guidance comes before state laws, as Bayer highlighted that the Environmental Protection Agency does not classify glyphosate as cancerogenic. Regardless, legal experts predict that Bayer will need to spend USD 10-12 billion to settle around 125,000 lawsuits. 

Although it started in a wet market, some experts are using the coronavirus pandemic to highlight the inherent dangers of massive livestock farms, or Concentrated Animal Feeding Operations (CAFOs), as they call for urgent institutional reforms. In Germany, the Green Party went as far as proposing a minimum price for meat, while a new law was passed banning meat plants from hiring foreign workers on short-term contracts. And in the Netherlands, Europe’s biggest pig slaughterhouse managed to avoid disruptions by relying on robots to do most of the work. 

In the meantime, global food producers continue to bet on the growth of plant-based meat. ADM and Marfrig Global Foods, the world’s second-largest beef producer, created a new venture called PlantPlus Foods to market plant proteins in North and South America. The market for plant-based meat should more than double in the next 5 years, the firms estimated. Otherwise, Nestle will be forced to rebrand its plant burger in the EU after a Dutch court agreed with a claim by Impossible Foods that Nestle’s Incredible Burger was too similar to the Impossible Burger. Nestle will rename its product Sensational Burger as a result, while it used the name Awesome Burger in the US after a court made a similar ruling. 

Competition is also growing in the coffee sector as large firms are rushing to fill in the gap left by small operations which did not have the cash reserves to survive an extended lockdown. Nestle and Starbucks are seen as the two main contenders, but Coca-Cola joined the scene with its 2019 purchase of Costa Coffee, the second-largest coffee chain in the world. Earlier this week, Coca-Cola launched the first at-home Costa Coffee products in the EU. But small coffee operations might not all disappear, as this couple from London discovered. They opened two small coffee shops inside red telephone boxes and realised that the lack of space inside the boxes was actually an advantage in the time of social distancing. 

This summary was produced by ECRUU

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